"I'm working 16 hours a day, and I'm still not making
money!"
If that is you, you need to stop working for peanuts!
Since I work with contractors from all over the country, I
typically find their pricing model is all wrong. Simply put, they are working
for peanuts. Peanuts are okay if you are an elephant. However, working for
peanuts is not good for you or your business and its survivability.
A good pricing model must cover your costs and generate
enough for your reasonable wage and profit. This is where too many contractors
make this fatal mistake. They allow the market to drive their price down into
the cellar.
The steps to correcting this is to have a real understanding
of your numbers. That means, having them in a format that allows you to see
what it is costing you, what your burden or overhead really is, and what you
project you can do over the year.
Nevertheless, let me warn you. I see lots of numbers from
hundreds of contractors. In 9 out of 10 instances, their Chart of Accounts is
wrong and misleading. Why? Because most accountants and CPAs that set them up
are inexperienced on what makes a contracting business work.
If the Chart is incorrect, that means all the assumptions
being made are inaccurate. This leads to assuming you are making money when you
are really leaking money.
I often hear contractors say that their competition is
taking all the work for nothing. I say, let them! The earlier they feast on the
peanuts, the sooner they will find themselves in financial trouble.
Don't assume yours are correct. I strongly urge you to find
out what you have, and what you need to do to correct them.
The bottom-line is this. You're in business to make money.
You need to earn a weekly wage just like the wages you pay your help. However,
in order to grow your business and survive, you need to make a profit on top of
everything else. Get on top of your financials. This is the key to success.
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